knife tool not working
The reason why your knife tool is not working is due to the fact that you have multiple polygons on top the same surface area. What I did was ... I made sure I "removed doubles" by hitting the W key and chose "remove doubles". After which the knife tool works.

As for your screencast, the site blender.stackexchange will only accept .gif files. You can use Screen 2 Gif software to capture the gif but it has to be below 2mb , if you want to upload via stackexchange's internal upload interface. Or else you would have to upload your gif to an external site and add the link to your post.